Overseas assignment and application of locality pay to annuity


Q. I understand that my stateside locality pay will not count towards my retirement calculation for time that I serve in Naples, Italy. I am about to start a 3-year tour there, and when I return to the U.S., plan to retire. How will my annuity be calculated — based on my “high-3” from my last three stateside years, or does the more current base salary in Naples have something added to it as well for annuity calculation purposes?

A. Your annuity will be based on your highest three consecutive years of average base pay, regardless of when that occurs in your career. While base pay includes locality pay, it doesn’t include any allowances or differentials that you may receive while overseas.


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Reg Jones was head of retirement and insurance policy at the Office of Personnel Management. Email your retirement-related questions to fedexperts@federaltimes.com.

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